by 
Pastaman
ANSWERS: 10
-
In general, a healthy company will have P/E ratio of 15 to 25. If it's above 25, or especially if it's over 40 or so, it may be over-valued. If you're looking for bargains, look for companies under 15.
-
86
-
I think this totally depends the type of market we have, on the type of company and the industry it is in. In a strong bull market you can still make a lot of money on stocks with very poor P/E ratios. A growth stock will have a significantly higher P/E than a large slow growing stock with a high diviidend. Some industries like most high tech industries have higher P/E ratios than other industries like utilities. Many people look at the PEG ratio for this reason. The PEG ratio is the P/E ration divided by the growth rate of the company. A PEG ratio less than 1 is considered a positive sign, but this too is relative to the industry and the overall market conditions.
-
When thinking about a company's PE ratio, it's important to consider what sector that company is in, and the typical PE in that sector. A high PE ratio in one sector might be just average in another sector, or vice versa. A technology stock that trades at 15 times earnings may be considered cheap because the average PE ratio for technology stocks is 22, whereas an electric utility that trades at 10 times earnings can be viewed as expensive because the average PE ratio for utilities is only 7.
-
My answer goes along with Pastaman's. I personally look for a P/E ratio of about 12, and sometimes that can be hard, so yes under 15 looks like a good buy. 20-25 seems a little high for me, but anyhting near 40, stay away from. Over-valued stocks are not a good thing? Ever heard of the great depression? People of all types kept throwing money into over valued stocks abd before they knew it, the companies couldn't handle it and then the stock market crash of 1929 occured. Good luck! Take care.
-
But very funny. Joke, get it?
-
If a company has a P/E higher than the market or industry average, this means that the market is expecting big things over the next few months or years. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the stock price will need to drop. * A higher P/E Ratio shows willingness of market to pay more for the company’s earnings * Some investors read a high P/E as an over-priced stock, which may be the case sometimes * However, it can also indicate that the market has high hopes for the share’s future and has bid up the price. Conversely… * A low P/E Ratio may indicate ‘vote of no-confidence’ by the market which means that the investors have undervalued the stock due to lack of confidence in its future growth * However, it could also mean that this is a stock which has been overlooked by the market and does possess strong future growth potential (a possible contra pick) * If this is the case, they are considered value stocks and investors sometimes make their fortunes spotting these ‘diamonds’ before the rest of the market discovers their true value.
-
If a company has a P/E higher than the market or industry average, this means that the market is expecting big things over the next few months or years. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the stock price will need to drop. * A higher P/E Ratio shows willingness of market to pay more for the company’s earnings * Some investors read a high P/E as an over-priced stock, which may be the case sometimes * However, it can also indicate that the market has high hopes for the share’s future and has bid up the price. Conversely… * A low P/E Ratio may indicate ‘vote of no-confidence’ by the market which means that the investors have undervalued the stock due to lack of confidence in its future growth * However, it could also mean that this is a stock which has been overlooked by the market and does possess strong future growth potential (a possible contra pick) * If this is the case, they are considered value stocks and investors sometimes make their fortunes spotting these ‘diamonds’ before the rest of the market discovers their true value.
-
Hoping someone can provide some insight for me. If a company I work for a major furniture store has a P/E of 1.17 is this a bad sign. The share prices have gone from about $8-$9 down to 98cents in 6-7 months. They also stopped paying dividends.
-
So what's a good P/E? The best way to tell is to know the historical P/E for a stock. What has been the average annual P/E over the last 10 or 20 years? If the range has been between 5 and 25 and the stock is trading at a P/E of 30, then it's well above its highest average annual P/E and caution is advised. If it's trading closer to five, then it's an indicator that maybe the stock is getting to a level worth buying. But again, no one number tells the story. http://www.bloggingstocks.com/2009/07/18/comfort-zone-investing-the-power-of-one-number-the-p-e-ratio/
RELATED QUESTIONS
Copyright 2023, Wired Ivy, LLC